LAW ÀLA MODE Issue 6 – Summer 2012
US guidelines for working with models
When is a free handbag considered a bribe?
Use of nanotechnology for cosmetics
Collaborating with Central St Martins
Practical tips for recovering design right infringement damages
INTA Event: Around the 2012 retail world in sixty minutes
Litigators get (anti) social
An Australian take on e-tail launches
The European Commission’s ambitious plan for the European digital marketplace
Fashion, Retail and Design Group Contents
AMERICA’S NEXT TOP MODEL 04 Guidelines for brand owners
BRIBERY AND THE FASHION INDUSTRY 05 When is a free handbag considered a bribe?
NO TRADEMARK SEIZURE FOR GIANFRANCO FERRÉ IN ITALY 06 The court of Isernia gives its decision
NANOPARTICLES NOT TOO SMALL TO ESCAPE US REGULATION 07 FDA issues draft guidance on use of nanotechnology in cosmetic products
RELAUNCHING HERITAGE FASHION BRANDS 08 What should your IP audit involve?
AT THE CROSSROADS OF TEXTILE MANUFACTURING: TURKEY 09 Examining the risk and opportunities
TAKING DAMAGES INTO ACCOUNT 10 – 11 Top tips for English law litigants
E-COMMERCE UPDATE 12 What’s on the agenda?
ONLINE RETAIL IS BOOMING 13 Three key tips to keep in mind when opening your online store
LITIGATORS GET (ANTI)-SOCIAL 14 – 15 Social media as part of a litigation strategy
A WORD FROM THE INDUSTRY’S MOUTH 16 – 17 We chat to blogger Victoria Chang
INTA EVENT ANALYSIS 18 Reflecting on the top branding issues for retailers in 2012
BUSINESS ROUND-UP 19 The news and the views
CALENDAR 20 Our round-up of what’s on where you are
02 | Law à la Mode Knitwear designed by Cynthia Fong, Central Saint Martins, 2012 Graduate Editorial All eyes are on London this summer, with celebrations Finally, following on from our special edition of Law à la Mode to mark the Queen’s Diamond Jubilee, not to mention to mark the 134th INTA Annual Meeting in Washington, the much-anticipated Olympic Games. With this in mind, DC, we give you an insight into our exciting INTA event: the London editorial team are delighted to bring you this “Around the retail world in sixty minutes: Reflecting on the sixth edition of Law à la Mode. top branding issues for retailers in 2012”. Putting our British fashion foot forward, at page 20 we We do hope that you enjoy this summer issue. If you have any explore DLA Piper’s recent collaboration with the School of comments please get in touch with the Fashion, Retail and Fashion and Textiles at Central Saint Martins College of Arts Design Group via our email: [email protected]. and Design. 2012 has also seen the bedding down of the UK’s Ruth Hoy and Rebecca Kay new and pervasive Bribery Act, so at page 5 we look at the implications for the fashion industry, following our popular March seminar “When is a free handbag considered a bribe?” Continuing the Anglo theme, at pages 10 – 11 we consider London Editorial Board ways of recovering damages under English law for design right Ruth Hoy (Partner and Co-Chair of the Fashion, Retail infringements. and Design Group) Moving further afield, we take a look at the European Rebecca Kay Commission’s ambitious plan for the European digital Kokyee Ng marketplace, and our Istanbul colleagues introduce us to the opportunities (and risks) of using Turkey as a manufacturing Graham Williams base. Our US team explore new guidelines for working with models, while our team in Sydney has some top tips to keep in mind when opening an online store. This issue includes all our regular features, including our social media article, “A Word from the Industry’s Mouth” (where we meet Victoria Chang, Belgian lawyer turned fashion blogger), Business Round-Up and our calendar page of this season’s major fashion events.
www.dlapiper.com | 03 America’s Next Top Model…
By Guidelines Alexander S. Birkhold (New York)
The recent formation of the Model Alliance, an organization For more information, visit: http://labor.ny.gov/ seeking to enforce and expand existing legal protections workerprotection/laborstandards/workprot/specoccs. for models in the United States, has prompted increased US shtm#childmodel. scrutiny of employment and image rights issues in the fashion In addition to following the legislative and recommended industry. regulations, brand owners working with models (whether Although labor laws vary among US states, the Department in the US or elsewhere) should also prepare model releases of Labor, through the Fair Labor Standards Act, has set before work begins in order to avoid subsequent conflict with minimum wage requirements, established 14 as the minimum their client. Any person who knowingly uses another’s name, employment age and limited the hours of child employees photograph or likeness without the person’s consent may be under 16. New York has already augmented these federal liable for damages sustained by the injured person. A model requirements, further regulating the working hours of minor release, however, provides the authority to use an individual’s models. name, voice, visual likeness, photographs or other stipulated terms. When drafting a model release, at least three factors On top of New York’s laws, organizations such as the Model should be considered: Alliance and the Council of Fashion Designers of America have articulated aspirational guidelines for working with ■ Purpose. Will the image be used in advertising, an models, including: editorial or for art?
■ Do not hire models under the age of 16 to walk in ■ Duration of use runway shows ■ Nature of use. What is the medium in which the images ■ Do not allow models under the age of 18 to work past will be published? Not all models will agree to allow their midnight on fittings or shoots image used in certain media, so it is especially important to negotiate this term before use ■ Models may refuse non-paying jobs and jobs that pay only in “trade” To avoid disagreement later, make sure to discuss these factors up front, before your model walks on set or down ■ No model under the age of 17 shall be asked to pose nude the runway. or semi-nude
■ All jobs and castings involving full or partial nudity must be subject to informed, prior consent
04 | Law à la Mode Bribery and the Fashion Industry: When is a free handbag considered a bribe? By Jo Rickards and Laura Ford (London)
Bribery has always been illegal in the UK, but the Bribery Facilitation “grease” payments Act 2010 (the Act) which came into force in the UK on Another issue of concern common to all industries involved 1 July 2011, has brought this crime into sharp relief, not least in the import and export of goods, including retailers, is because it is now far easier to prosecute than it was under the facilitation payments. Facilitation payments are low-level old law. The Act affects businesses across every industry and payments to foreign public officials to speed up routine not just those in banking and finance. It therefore comes as government actions. They may be legal in certain countries no surprise that fashion businesses will need to review their under very strict circumstances, but are and have always internal practices to ensure that they do not fall foul of the been illegal in the UK. The enactment of the Act made the Act. DLA Piper and Brunswick hosted an event in March issue of facilitation payments all the more pressing however, this year for our fashion and retail clients to address how the as it created a new strict liability offence under section 7 of Act affects them and to consider the question “when is a free the Act, which means that a business can be liable simply by handbag considered a bribe?” failing to prevent bribery (by its own employee or even its agents). For example, if a fashion house exports its goods to Free samples China, and its customs broker makes a facilitation payment One practical issue of concern for the retail industry is that to a Chinese port official to ensure the smooth transition of of free samples. The majority of fashion houses send samples the goods through customs so they arrive in time for an award of the following season’s must-have key pieces to journalists ceremony, the fashion house could be charged with failing to to review and often allow the journalists to keep the samples. prevent bribery. Answering the question of whether this could be considered a bribe depends on a number of factors; for example, by Managing your risk providing the sample, is the fashion house intending that There are a few simple measures that companies in the journalists will write well of the item, irrespective of whether fashion industry can take to manage their risk in a bribery they liked it or not? Or is the fashion house just hoping that and corruption context. They should conduct a risk the item will receive a good review, with no intention of assessment to see where their risks lie and design and improperly influencing the content of the journalist’s article? implement proportionate procedures to counter such risks. Even if the fashion house does not have such an improper Management should send a strong message from the top intention, would a prosecutor think and could they establish that bribery in any form is not tolerated by the business, that they did? Could the cumulative value of samples given and employees should be trained on its anti-bribery policies over time give the appearance of bribery? Is the sample of and procedures. If a company does these things, it will be in a such value that the gifting of it appears disproportionate? strong position to argue that it has adequate procedures in These are all questions that brand owners should ask place to prevent bribery and as such has a potential defence to themselves. the section 7 offence.
www.dlapiper.com | 05 No trademark zure for Bysei Lucas Niedolistek (Hong Kong) Gianfranco TMFerrÉ in Italy
By Stefania Baldazzi (Milan)
The Court of Isernia in Italy has finally ruled on the seizure In addition to the alleged contractual breach, the request to of Gianfranco Ferré’s trademark. The case started last seize the trademark was also supported by the related claim October and was brought by the three commissioners in of non-payments to debtors. charge of the extraordinary administration of IT Holding, PGD challenged the application, claiming to be in the course against Paris Group Dubai (PGD), IT Holding’s new property of a debt evaluation, having already invested €22 million company. in the company. They also argued that they had maintained In March 2011, PGD acquired the Gianfranco Ferrè Group employment levels and had liquidity of €5 million. (GFG), consisting of two Italian companies: ITC and Nuova PGD confirmed that Gianfranco Ferré “will remain Italian Andrea Fashion, as well as the foreign company Gianfranco and will preserve its soul”. Ferré UK Ltd. On 16th May 2012, after seven months of postponements, the At that time, GFG was under an extraordinary administration Court of Isernia rejected the request of the trademark seizure and was controlled by three government appointed by the commissioners. The Court explained that the rejection commissioners. The commissioners filed an application was due to its lack of jurisdiction and that the issue must be for urgent proceedings, to seize GFG’s trademark for debated before the specialized section of Intellectual and PGD’s alleged breach of the contractual obligations under Industrial Property in the Court of Milan. the buyout agreement. GFG had suspected that PGD was At present, no new appeal has been filed before the Court of about to transfer GFG’s trademark abroad, probably to the Milan. Updates on the case will be available in due course on Middle East, and would use the trademark for products and our IPTitaly blog http://blog.dlapiper.com/iptitaly/ and on our segments of the market entirely incompatible with the image ReMarks blog http://www.remarksblog.com/. of the fashion house.
06 | Law à la Mode Nanoparticles Not Too Small to Escape US Regulation: FDA Issues Draft Guidance on Use of Nanotechnology By Michelle Schaefer in Cosmetic Products (Washington, DC)
Nanoparticles are just three or four atoms wide and it takes about 25,000 of them to cover the width of a human hair. Despite their small size, these engineered particles are highly effective and thus extremely valuable to the cosmetics industry. Manufacturers can use nanoscale versions of ingredients to provide better UV protection, deeper skin penetration, long-lasting effects and increased color and finish quality. The global market for cosmetics utilizing nanotechnology (i.e., the use of these nanoparticles) is projected to reach an estimated US $155.8 million in 2012. But is nanotechnology safe? This is the question being addressed by regulators all over the world, with the FDA – the US federal Agency tasked with regulating the safety of cosmetics – being the latest regulator to issue guidance titled “Guidance for Industry: Safety of Nanomaterials in Cosmetic Products.” While not binding on the industry, the draft guidance does represent the direction of FDA’s thinking on this emerging technology. The guidance highlights the FDA’s concern that standard test methods and safety protocols may not adequately assess whether nanomaterials are safe to use in cosmetic and personal care products. The FDA cautions that standard safety tests may need to be modified or new methods developed to address (1) the key chemical and physical properties that may affect the toxicity profile of nanomaterials and (2) the effects of those properties on the function of the cosmetic formulation. The FDA is encouraging companies that use a nanomaterial in a cosmetic product to meet with them to discuss the test methods and the data needed to substantiate the product’s safety. Companies may ultimately be asked to submit safety files in support of any nanomaterials used in their products. In light of the draft guidance, the fact that consumers’ and plaintiffs’ lawyers are becoming more aware of the wide-scale use of nanotechnology, and the emerging science regarding possible human health effects, cosmetic companies marketing products in the US should consider following these strategies in order to mitigate potential litigation and regulatory risks:
■■ Prohibit the use of unsafe or untested nanomaterials in cosmetics
■■ Request data and test results from suppliers and manufacturers on the environmental, public health, and worker safety impacts of nanomaterial ingredients
■■ Track emerging developments in nanotechnology science. Be aware of regulatory guidance and recommendations and consider these a floor not a ceiling
■■ Consider complying with more robust standards set by other regulatory bodies (e.g. EU standards)
■■ Consider labeling the presence of nanomaterial ingredients
■■ Consult with the FDA about products that contain nanotechnology.
www.dlapiper.com | 07 Relaunching heritage fashion brands By Ruth Hoy (London) and Azin Kafai (Birmingham)
Recent years have seen numerous high-profile re-launches of Why did the business “die”? You will need to consider what heritage fashion brands, such as iconic 1960s brand Biba Rose the original brand stood for and which key elements have in the UK, Vionnet and Moynat in France and Halston in the some current relevance for your target audience as well as US. Most recently, in May 2012, there were press reports of which aspects will need to change. the proposed re-launch of the Schiaparelli brand, created by Is there any surviving IP and who owns it? This will be the French fashion designer who found fame in the 1920s critical to your ability to re-launch the brand. It may be that with her innovative designs. you will be able to attack existing registrations for non-use. With the current trend for vintage, the benefits to fashion Alternatively, you will need to establish whether the IP can companies of such relaunches may be obvious: the opportunity be acquired and if so, at what price; or whether, alternatively, to exploit the public emotions of nostalgia in an iconic brand at it is only available for use (via a licence) at a fee. In the latter relatively low cost and risk. But what should a savvy operator case, what restrictions will be put on your future use? It is be wary of? There is no excuse for failing to conduct due rare that you will be able to exploit an ‘old’ brand without diligence on the brand which you wish to re-launch. This is payment of any cost to your business whatsoever. The fee likely to involve a full IP audit, considering issues such as: will need to be factored into your cost-benefit analysis of the re-launch. What did the original brand consist of? Were there registered marks? Or did the business rely upon the goodwill Own name? Additional considerations may apply if there is built up in unregistered marks and get up? Did the business a living individual who had a connection or involvement with have any other registered intellectual property which could be the original brand. For example, Barbara Hulanicki expressed relevant, such as design rights? her disappointment in the Biba relaunch. How did the business “die”? Did the business go through The key message when contemplating a brand re-launch is some form of acquisition or insolvency process pursuant to to conduct proper legal research and create a well-thought which the IP assets were sold? Or were the trade marks and out plan of execution. other registered IP allowed to lapse?
08 | Law à la Mode At the crossroads of textile manufacturing By Gokhan Gokce and Fulya Ozgener (Istanbul) Turkey
Following ten years of rapid development, Turkey, at the Afro-Eurasia, serving as a gateway to Europe, Central Asia, crossroads of Europe and the Middle East, has become a the Middle East and the Pan-Euro Mediterranean region. key player in the global economy. With a growth in revenue Moreover, the wide range of textile options (from cotton to of 8.5 percent during the first quarter of 2012, the Turkish fiber, thread to fabric, and fabric to ready-to-wear clothing), economy is now the world’s second fastest growing economy, the availability of experienced manpower on every level, a after China. structure that is innovative and open to change and a liberal policy toward all forms of foreign investment, add up to make Within this burgeoning economy, one of the most Turkey one of the world’s most important production and prominent sectors is the textile industry. Dominated by trade centers for the future. the manufacture of clothing, this sector accounts for an estimated 15 percent of national employment and almost On the other side of coin, there are the inevitable risks. 40 percent of exports. Turkish exports of finished products All foreign manufacturers in Turkey, whether large or small, amount to some US $8 billion a year and account for almost famous or unknown, face the challenge of counterfeiting. 5 percent of world trade. Turkey now stands out as the second-largest market for counterfeit products in the world, with US $3 billion of Particular inducements for Europe and other major global turnover. Despite this, trademark owners are increasingly markets turning their eyes to Turkey for textiles and pursuing their rights in Turkey; initiating both civil and ready-to-wear clothing are: (i) that world trends have criminal actions against the counterfeiters. Protection of stimulated an increase in orders, and (ii) with China turning trademark rights in Turkey is improving day by day to its own domestic market and purchasers hesitant to place in accordance with harmonization of trademark law orders with newly launched textile producers in countries in accordance with European Union legislation, increasing like Egypt, Algeria, Tunisia and Yemen, Turkish textiles have numbers of specialized IP courts and enforcement units, become Europe’s favorite. and the awareness of manufacturers, traders and consumers. In addition, there are a number of factors which make Turkey attractive for foreign manufacturers in the textile sector. First, Turkey is centrally located in the landscape known as
www.dlapiper.com | 09 TAKING DAMAGES INTO ACCOUNT TOP TIPS FOR ENGLISH LAW LITIGANTS by Ruth Hoy (London)
When you encounter a blatant case of design rights An Account of profits is a calculation infringement, often your main objective is to have the infringing garments removed from sale, delivered up and/ of the net profit made by the infringer. or destroyed as soon as possible. However, as the design It is calculated by taking the sale price of right owner, should you also be looking to recover monetary sums from the infringer? In settlement discussions, do you the infringing garments, multiplying that by too easily waive your claim to damages because it seems the number sold, and deducting costs of like an uphill struggle to justify and/or too expensive to the infringer (including manufacturing and enforce payment? In this article, we explore practical tips for recovering damages in such cases. delivery costs). Successful claimants in design right infringement cases are entitled to elect between two financial remedies: an account of profits, or damages.
10 | Law à la Mode Demanding an account of profits from an infringer can be numbers of actual sales by the infringer, a competitor problematic. Where the infringing goods are being sold by defendant), you may want to consider some or all of the a cheaper brand, the profits made by the infringer may not following: be significant, particularly early in the sale period where the ■■ Patents County Court – Remember the UK Patents infringer’s marginal costs are higher. In addition, the actual County Court. This is a specialist intellectual property profit made by an infringer may be very difficult to calculate court set up with the specific aim of providing a less without information obtained from the infringer itself, which expensive and less complex alternative to the High Court. may be difficult to get hold of and (potentially) untrustworthy. The trial is limited to one or at most two days and there is There may also be some dispute with the infringer about what a £500,000 limit on damages. Similarly, there is a £50,000 costs they can legitimately deduct from their gross profit in cap on costs recovery. arriving at the net profit. ■■ Default judgment – Sometimes infringers fail to file a Your alternative approach is to demand damages. defence. For example, in one recent example, Superdry obtained an award of £45,000 against Rhodi, an infringer Damages: The sum of money which will who was marketing infringing shirts at £22 per shirt, when put the injured party in the same position Rhodi failed to file a defence. as he would have been in if he had not ■■ Summary judgment – In cases of blatant infringement, consider applying for summary judgment, which is a sustained the wrong. quick way to achieve judgment when the Defendant has There are various different approaches to the calculation of no prospect of succeeding on his defence. This was the damages which you may want to consider. While you have approach taken by Jimmy Choo in 2008, and Floyd J had the burden of proving your loss, it is important to remember no problem finding that “the likelihood that these two that a court has latitude to apply “a sound imagination and designs could have been arrived at independently, given the practice of the broad axe” in assessing compensation so the large number of identical features in a design field as you will need to take a similar approach in your settlement free as the present one, seems to me to be truly fanciful”. discussions. The assessment of damages can include: ■■ Evidence – whether you are negotiating, or involved in a
■■ The net profit which you would have made if you had sold more formal legal process, it is never too early to have your the garments. This approach is approved by the European ducks in a row in terms of evidence. Factors which might Enforcement Directive. However, it will generally only be be relevant in the assessment of damages, and on which successful where you can show that the infringer’s sales you might want to lead evidence, include: are sales which, but for the infringement, you would have − How much have you invested in obtaining/creating the made (i.e. that your goods and the infringing goods are design in question? IP rights are expected to provide substitutes). the creator with a return on its investment.
■■ What you would have been able to obtain by way of licence − The margin that you would have made on sales of the fee/royalties from the infringer had you licensed them to infringing goods. make the product. − Your budgeted expectations of sales of your garments ■■ The typical or standard licence fee in the industry. and the net price you would have achieved on such sales.
It is also worth bearing in mind that the Enforcement ■■ Joint trial of liability and damages – In intellectual Directive additionally allows a successful claimant to property cases, split trials of liability and damages are the damages based on elements “other than economic factors, norm, but there is no reason why this has to be the case. including the moral prejudice caused to the claimant by the Consider asking the court at the case management stage to infringement”, although the precise ambit of such damages is assess damages at the trial in order to save costs. yet to be established. ■■ Interim payment – This could be one of the most useful If you cannot agree on damages as part of a settlement, it tools in your toolbox! Following a judgment on liability is sometimes worth agreeing that judgment be entered in being entered in your favour, the court has the power to your favour and that the assessment of damages be left to grant an interim payment of no more than a reasonable the court. proportion of the sum which is likely to be recovered on Similarly, if you are involved in negotiations concerning an the inquiry. If you can establish by cogent evidence what infringing article, and are unable to persuade the infringer this sum should be (and obtain judicial approval of your that a monetary payment is appropriate in the circumstances, calculation) it can be a useful precedent to use against in a suitable case (persistent/repeated infringements, large other infringers in future.
www.dlapiper.com | 11 E-Commerce Update What’s on the Agenda? By Duncan Calow and Mary Mullen (London)
Two years into the Digital Agenda, the European Commission’s or mobile phone from reaching their full potential. ambitious plan for the European digital marketplace continues These include market fragmentation, consumer doubts to gather momentum. At the start of this year the European over security of their data and payment information, the Commission adopted “A coherent framework for building lack of clarity and transparency in relation to costs with trust in the Digital Single Market for e-commerce and online additional charges (to consumers and to businesses) being services”. The Communication gives some valuable pointers an unwelcome feature of paying for goods and services to online retailers on the major changes set to influence the online and consumers not being entirely comfortable digital landscape in the near future. With the Commission’s five with the process of product delivery. The Communication priorities as a framework, we set out our pick of the planned proposes establishing reliable and efficient payment measures most likely to impact online businesses: systems in an integrated single space through pushing the Single Euro Payment Area (SEPA) concept, which allows 1. Decreasing barriers to purchasing goods and services Europe-wide transfers and debits. The Commission has online – doubling the volume of e-commerce by 2015 adopted a Green Paper entitled “Towards an integrated through better implementation (rather than revision) of European market for card, internet and mobile payments” the E-Commerce Directive which discusses the potential benefits of the SEPA model to Businesses can expect the Commission to require businesses, consumers and banks. EU Member States to better administer the E-Commerce 4. Combating online abuse through a horizontal Directive and to evaluate how the directive is currently being European framework for notice and action procedures, implemented. The Commission will increase its efforts to better control of intellectual property online with bring uniformity to implementation across the 27 Member pan-European collective licensing and resolving disputes States, particularly through its proposed regulation on the more effectively with regulations on alternative processes voluntary European Consumer Sales Law. Implementing a for business to consumer and business to business European Strategy for Intellectual Property will be another disputes key action to decreasing barriers to e-commerce along with a crack-down on selective distribution and unfair business The Commission recognizes that the position of intermediate practices. ISPs needs to be clarified as uncertainty is currently a barrier to growth in the digital marketplace. 2012 should see the 2. Improving consumer information and protection through Commission adopting an initiative on notice and action the new the Consumer Rights Directive and putting a procedures for ISPs. Dispute processes for settling consumer stop to discriminatory pricing based on a consumer’s online disputes are to be addressed in a proposed directive place of residence on dispute resolution for consumer disputes and a regulation The Consumer Rights Directive is due to be implemented on out-of-court resolution. A business-to-business dispute at national level by the end of 2013. This directive adds settlement initiative is also on the cards. to the existing requirements to provide consumers with 5. Deploying high-speed networks and encouraging clear contract information, particularly in respect of digital Member States to embrace advanced technology content retailers. It should also provide some guidance on how to manage information requirements in respect of Retailers should expect national authorities to increase mobile commerce. The Commission aims to build retailers’ investment in engagement with digital solutions; awareness of their online obligations through existing increasing customer access to and confidence in the online networks such as the Enterprise Europe Network and the marketplace. Harnessing the potential of mobile commerce publication of a special guide for retailers. A European is a key focus, with the European Council due to implement Consumer Agenda is to be presented in 2012 which aims a policy on radio spectrum, which will increase the usability to increase consumer confidence in online and offline of mobile internet devices such as smartphones and tablets. purchases. A draft Regulation on electronic identification The Commission also plans to adopt a strategy on Cloud and authentication and on electronic signatures has just been Computing aimed at providing certainty to operators on the adopted by the Commission – another measure to increase technology that has major potential for retailers in terms of consumer trust. productivity and savings. 3. Reliable and efficient payment and delivery systems to increase efficiency, speed and trust in distance electronic payments – the Single Euro Payment Area The Communication identifies some factors that are preventing the markets for payments by card, Internet
12 | Law à la Mode Online retail is booming! Three key tips to keep in mind when opening your online store by Melinda Upton and Anna Shelton-Agar (Sydney)
It is predicted that by 2016, 23 percent of the United Kingdom’s retail pound and 9 percent of Australia’s retail dollar will be spent online. Indeed, consumers in the United Kingdom and Australia are leading the charge to buy online, with those nations ranking first and third respectively in the global leader board of national online consumer transactions. Just earlier this month, it was announced that ASOS (an online fashion retailer headquartered in London) counts Australia as its second biggest customer. Online shopping provides business with a huge growth opportunity; however, with opportunity comes risk. Outlined below are three keys tips to consider when thinking about opening an online store:
1 A MESSY WEBSITE IS LIKE A MESSY CHANGING ROOM – KEEP YOUR BRAND INTACT Fashion retail is about both the clothes and the shopping experience – dynamic store designs, professional staff and attention to detail all foster customer loyalty and help to build brand reputation. Ensure your online store lives up to your customers’ expectations; invest in a website design that does your brand justice; ensure billing and searching functions are error-free; deliver products with the same finishing touches as in-store; and respond to online complaints within the same timeframe as you would a complaint over the phone.
2 THE CUSTOMER IS ALWAYS RIGHT – ON and OFFLINE Online customers are afforded the same (and in many territories, stronger) consumer law protections as they would receive in a bricks and mortar store. Therefore, to avoid complaint, or regulatory scrutiny, ensure that: all products are accurately described and displayed; delivery and return policies are clearly defined and followed; and goods are packaged safely and arrive at the required destination promptly.
3 YOU WOULD LOCK YOUR HIGH STREET STORE – DON’T FORGET TO LOCK YOUR ASSETS ONLINE A move online will result in a large scale upload of trade marks (logos, slogans and brands) and copyright works (photos, corporate documents, videos and blurbs). Ensuring that IP is registered (where applicable) and catalogued is crucial when developing an online retail strategy. Take practical precautions: digitally lock all ‘copyable’ IP; display notices of IP rights; and regularly review your website to ensure that only content that needs to be online is online.
www.dlapiper.com | 13 Litigators get (anti)-social By Kiran N. Gore (New York) and Rebecca Kay (London)
Did you know that if Facebook were a country, it would In March 2012, offbeat British jewelry brand Tatty Devine have the world’s third largest population? Or that Twitter published a blog post entitled “Can you spot the difference?”, welcomes nearly 500,000 new users a day? With mind-boggling which named a number of Claire’s Accessories products usage statistics like these, it should come as no surprise that which it considered to be infringing. The enterprising tactic social media is rapidly becoming a tour de force for litigators. sparked a backlash across the fashion community, eventually Indeed, in August 2010, the Supreme Court of Singapore went resulting in a joint statement from the brands which so far as to publish a consultation paper seeking to “explore ways confirmed that several (although not all) of the high-street of capitalising on social media to improve the civil litigation items had been removed from sale. However, such strategies process”. are not risk-free. Incensed brand owners need to ensure that any finger-pointing is factually accurate; otherwise they Using social media…as brand protection intelligence may become exposed under local law to a counter-allegation As networkers tweet about everything from the banal to such as defamation, unjustified threats or unfair competition. the ridiculous, sifting through the social media landscape Moreover, the limitations to online exposures cannot be for brand protection intelligence can seem like a task of ignored: if the online attack does not have the intended effect, Herculean proportions. However, if brand owners get then brand owners may be forced to jump through the usual it right, they are sitting on a gold mine of information. legal hoops anyway (for example, in the UK a blog post is These opportunities have not been ignored by media unlikely to satisfy the Civil Procedure Rules requirement monitoring businesses, who have been quick to offer that a party send a pre-action letter before commencing court services which police online discussions, identify potential proceedings). Similarly, unless a brand owner incorporates infringements and track legal threats. Moreover, the social financial compensation into an ancillary settlement, the best media phenomenon has created a network of valuable outcome it can hope for is a withdrawal of the infringing legal-savvy resources. For example, Fashionista, a popular products from sale. New York-based blog, regularly publishes a column entitled Using social media…to serve proceedings “Adventures in Copyright,” which identifies and debates copycat designs. What is interesting is that the authors are Social media, by its nature, makes individuals more not lawyers, but industry insiders who are immersed in accessible and the world smaller. Its burgeoning status as an new trends and swoop in on newsworthy stories. accepted manner of communication and connection calls for a natural progression toward it becoming a normalized forum Using social media…as part of a litigation strategy for service of process. Just last month, an Australian judge Social media also offers an accelerated, flexible and granted a disgruntled music festival promoter permission to cheap alternative to traditional litigation strategies of serve a lawsuit against American rapper Flo Rida through cease-and-desist letters and interim injunctions. a Facebook wall post, when it became clear that the rapper
14 | Law à la Mode could not be located physically. The decision follows those in that Facebook and Twitter also de-index these offending sites Canada (Knott v. Sutherland) and New Zealand (Axe Market from their search results. The judgment followed hot on the Garden v. Craig Axe) which permitted substituted service heels of a similar order issued by a Nevada federal court, where via Facebook, while the English High Court has taken a Facebook, Twitter, and Google+ were ordered to de-index particularly pragmatic approach to the civil procedural approximately 700 domain names which sold counterfeit capabilities of social media and permitted service of an Chanel products. injunction via Twitter as early as 2009. As social media gradually permeates all stages of litigation and brand protection, it is clear that brand owners, Using social media…as a means of enforcement practitioners, and adjudicators need to work both individually Just as social media can be a vehicle for spotting infringements, and collectively to make certain that its extraordinary reporting them and commencing related actions, the social opportunities are harnessed and that potential risks are networking realm is also being recognized as a forum for the averted. Whether this means a luxury brand ensuring that enforcement process. US court judgments involving websites its public relations specialists engage with fashion bloggers which sell counterfeit goods now commonly include specific to spot knock off goods, or outside counsel demanding orders calling for the “de-indexing” of the illegitimate websites de-indexing across social media platforms during the on search engines and social media platforms. For example, enforcement process, social media has become an integral the much reported US $100 million dollar decision, issued this part of the evolving brand protection landscape and, if April in Hermes International v. John Doe by the Southern employed strategically, is likely to remain in vogue for many District of New York federal court, recognized the influential years to come. power of social media and included additional instructions
www.dlapiper.com | 15 A Word from the By Industry’s Joris Willems (Amsterdam) Mouth
LAWYER TURNS FASHION BLOGGER WWW.COELHOANDCHANG.COM
This month we caught up with Victoria Chang, a former lawyer turned successful fashion blogger. In particular, we asked her about why she started her fashion blog and whether her former profession brings any benefits to her new career.
Victoria, can you tell us a bit about your background? Did your former profession provide any benefits in starting your blog? I was a corporate and tax lawyer for over ten years at two leading law firms. As a lawyer, I was active in the fashion Definitely, I made sure that our blog has the necessary industry and advised some of the largest and top fashion brands copyright notifications, drafted proper disclaimers, terms and on corporate matters and tax structuring. I was also an active conditions of use and privacy policy and made sure they are member of the fashion focus group at my last firm. published in a visible manner. What made you decide to become a fashion blogger? In drafting these policies, where there any specific topics you addressed? After practising law for over ten years, I decided to follow my first love: fashion. Together with a good friend, who also Yes. Of course I included the ‘usual suspects’, such as limitation has over a decade of experience in the service industry, we and exclusion of warranties and liability, intellectual property launched our blog on 1 January this year. rights, and applicable law and jurisdiction. However, I also included a licence for using content from our blog (limiting it to How did you start your blog? purposes or to personal use), user generated content (ensuring Firstly, as good business professionals we drafted a business that we have a worldwide, free licence to use it and a condition plan. We then organized the design and building of our blog that it does not infringe upon any right whatsoever). (including ensuring we own any and all rights thereto), registered Are there any other legal issues that a fashion blogger the relevant domain names and launched Linkedin, Twitter and needs to address? Facebook accounts. Simply using content from other websites or blogs is What is the mission statement of your blog? often not allowed, as much of this content is protected by Our mission statement is to inspire working women between copyright (such as pictures). In principle you either need the age of 20 – 50+ to follow their passion for fashion, to permission or the content might contain a licence to use it. advise them on what they can wear to the office and also at A commonly used licence is the creative commons licence casual occasions. We post photos of ourselves with fashion (see creativecommons.org). However, various copyright acts advice and we also have regular items such as street wear provide a so-called fair use exemption or a right to quote. with photos from women we meet on the street and photos of In short, using content under such exemption means that items ranging from bags to shoes and beauty products. you can only use it in a secondary manner. Other issues to
16 | Law à la Mode consider are personality rights and privacy. In short, in many We have already built a network with PR companies and countries it is simply not allowed to publish a picture of a will occasionally offer freebies to our readers, which third party without permission. are sponsored by various fashion brands. Having said that, we are proud that our blog is fashion editorial and How do you address these challenges for your street style not advertisement. We want to preserve our integrity as posts? independent fashion bloggers and our readers appreciate this. We always ask permission not only to take the pictures but Victoria, one last question: do you miss being a practising also to publish them. If we get a model’s e-mail address, lawyer? I e-mail them the pictures and ask them to confirm that they consent to the post. One could argue that by posing for the Never say never, but for now I’m following my true passion: street style post, that implies consent. However, one thing fashion. There are still plenty of talented lawyers to serve my previous career taught me is better to be safe than sorry. clients in the fashion industry, especially in DLA Piper’s Fashion, Retail and Design Group. What are your goals for your fashion blog? Victoria Chang, fashion blogger on I want to inspire a broad audience of readers from all over www.coelhoandchang.com the world. We specifically aim at a global audience. Also, by generating significant traffic we can start generating income.
www.dlapiper.com | 17 Reflecting on the top branding issues for retailers in 2012 at the INTA Annual Meeting
By Rebecca Kay (London)
As colleagues basked in the May bank holiday, around name as their brand, whilst Saskia Lais (Cologne) analysed 50 DLA Piper lawyers jetted off to join over 9,500 members the approach of the Federal German Patent Court to the of the international trade mark community as they gathered protection of apparel ornamentation. together in Washington, DC for the International Trademark Next up was Karine Disdier-Mikus (Paris), who discussed Association (INTA) Annual Meeting. As usual, our itinerary the March 2012 decision of the French Supreme Court was packed with a flurry of client meetings, conference against Abercrombie & Fitch Europe which, much to seminars and swanky receptions. However, this year’s hot the dismay of some high-street-retailer attendees of the ticket was a new addition to the agenda: a working lunch lunch, illustrated a particularly unforgiving approach to the for retail industry brand owners, hosted by the importance of evidencing use of a trade mark. DLA Piper Fashion, Retail and Design Group at our Washington, DC office. Entitled “Around the retail world Our global expedition ended in Asia, where in sixty minutes: Reflecting on the top branding issues for Edward Chatterton (Hong Kong) and Yan Zhao (Shanghai) retailers in 2012”, the event took us on a whistlestop global made an entertaining and informative double act. Their first tour of topical retail issues. evaluation of the options for protecting retail store formats (following the much-reported problems faced by Ikea), Following welcomes from Ann Ford (Chair of the US captured the interest of a number of global retailers who Trademark, Copyright and Media Practice, Washington, DC) themselves have distinctive trade dress. Secondly, our and Ruth Hoy (Co-Chair of the Fashion, Retail and Design Asian partners took a fresh look at anti-counterfeiting Group, London), Gina Durham (Chicago) kicked the event strategies in China, sparking a lively debate around the off with a review of the Ninth Circuit’s unexpected (and variety of legal processes in the region, the point at which surprisingly unreported) extension of the copyright misuse Chinese manufacturers of counterfeit products commit an doctrine in Omega v Costco. infringement and the effect of the proposed reforms to the From the US, we voyaged to Italy, where Giangiacomo Olivi PRC Trademark Law. (Co-Chair of the Fashion, Retail and Design Group, Milan) As well as being a fascinating insight into sectoral concerns, talked us through new fiscal and commercial advantages the lunch was a fantastic opportunity to catch up with for brand owners entering the Italian franchising market. industry peers. Thank you to all who attended! Staying in Europe, Ruth Hoy examined the risks and potential strategies for businesses using a designer’s own
18 | Law à la Mode Business Round-up
By John Wilks (London), Sandra Wallace (Birmingham) and Michelle Schaefer (Washington, DC)
New Top Level Domains include Reducing regulatory burdens for employers .fashion The Enterprise and Regulatory Reform Bill includes ICANN announced the list of new generic top level domains changes to employment law to give employers more on 13 June, and four applicants will be vying for ownership confidence to hire new staff and to strengthen the of .fashion. They all appear to be speculators hoping that framework for setting directors’ pay. The Bill will overhaul third parties will want to register second-level domains the employment tribunal system to promote dispute ending in .fashion. The domain will likely go to the highest resolution earlier on in the process and to deal with bidder of the four. Meanwhile, brandowners applied for their claims more expeditiously although the exact changes own gTLDs, such as .gap, .hermes, .gucci, .bananarepublic, made will depend on the outcome of the Underhill review. and .calvinklein. On executive pay, shareholders will be allowed a on the remuneration of directors and a binding vote on exit packages of more than one year’s basic salary giving more EMPLOYMENT LAW CHANGES power to business owners. ANNOUNCED IN QUEEN’S SPEECH “Shape Up Your Substantiation A number of legislative changes were announced in the or Tone Down Your Claims” Says Queen’s speech on 9 May 2012 with the aim of creating the FTC as it Continues to Crack more flexible working conditions and a better environment Down on Fitness Claims for economic recovery in the UK. Two of the changes In May 2012, Skechers USA, Inc. entered into a $50 million announced that will affect the fashion industry include: global settlement with the Federal Trade Commission (FTC) Making parental leave more flexible and attorneys general from 44 states and the District of Columbia for failing to substantiate claims that its toning The Children and Families Bill includes measures shoes help people lose weight, build strength and tone that will allow parents to share leave and balance work muscles. The settlement comes just eight months after the and family commitments. The plans will allow women US $25 million settlement between Reebok International Ltd to return to work earlier after having a baby (if they wish and the FTC for unsubstantiated claims that Reebok’s to) by effectively transferring some of their maternity leave footwear provided extra tone and strength to key muscle entitlement to the baby’s father. It is not clear whether this groups. Both footwear companies denied the allegations but Bill will implement The Modern Workplaces Consultation said that they settled in order to avoid protracted litigation. proposal to extend the right to request flexible working A few key points to take away from these settlements? to all employees and to implement a duty to consider such The FTC continues to target marketers making efficacy and requests “reasonably” but it seems to be a step in the right health related claims. Very specific quantitative claims e.g.,( direction and is one that will be welcomed by all. “11 percent more tone in the calf muscle”) seem to capture the FTC’s attention. Marketers should substantiate fitness-type claims with two adequate and well-controlled human clinical studies.
www.dlapiper.com | 19 Calendar (June 2012– August 2012) Compiled by: Rebecca Kay and Kokyee Ng (London)
Supporting talented British designers This June, DLA Piper began a pro-bono project with Central Saint Martins. Through the relationship, we will be providing training to students on navigating the intellectual property and commercial law landscape: both in an employment context and when commercialising their designs through their own business. Following a lively session with some of the class of 2012, we were delighted to be invited to a private view of the graduate degree shows on 14 June. Amongst those designs catching our eye were Cynthia Fong’s cosy knits, Alix Massieux’s “Peter Pan–inspired” textiles, Simon Mo’s floaty womenswear and Pinkney Gould’s innovative “cosmetic surgery” concept jewellery.
Jewelery designed Dress designed by Pinkney Gould, by Simon Mo, Central Saint Martins, Central Saint Martins, 2012 Graduate 2012 Graduate
June AltaRoma, AltaModa, Rome 7 – 11 July Graduate Fashion Week, Earls Court, London 10 – 13 June Amsterdam International Fashion Week 6 – 15 July London Collection: MEN, London 14 – 17 June Mercedes-Benz Fashion Week, Miami 19 – 23 July Chanel – Little Black Jacket Exhibition, Taipei 16 June – 8 July UKTI Creative Industries events, British Business Embassy, London Fédération Française de la Couture du Prêt-à-Porter des 30 – 31 July Couturiers et des Créateurs de Mode: Men’s for Spring/ Summer 2013 show, Paris Creative Industries days, London House/City Hall, London 27 June – 1 July 30 July – 1 August
July AUGUST
Fédération Française de la Couture du Prêt-à-Porter des Schiaparelli and Prada: Impossible Conversations – Couturiers et des Créateurs de Mode: Haute Couture The Metropolitan Museum of Art, New York show for Autumn/Winter 2012/2013, Paris 10 – 19 August 2012 1 – 5 July Mercedes-Benz Fashion Festival, Sydney Mercedes-Benz Fashion Week, Berlin 21 – 25 August 2012 4 – 7 July Mercedes-Benz Fashion Festival, Brisbane 25 – 31 August 2012
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